Which administrative requirement is avoided with SIMPLE plans?

SIMPLE plans, or Savings Incentive Match Plan for Employees, are designed to provide small businesses with a straightforward way to offer retirement savings options to their employees without the complexities associated with larger retirement plans. A key advantage of SIMPLE plans is that they do not require the employers to file Form 5500 annually with the IRS.

Form 5500 is used to report information about employee benefit plans, including retirement and welfare plans, and is generally required for most qualified plans. This requirement can add a layer of administrative burden and costs for plan sponsors. SIMPLE plans, particularly aimed at small businesses with fewer than 100 employees, are structured to simplify the retirement plan process, allowing employers to focus on their business rather than complex compliance and reporting obligations.

By avoiding the Form 5500 filing requirement, SIMPLE plans encourage more small businesses to offer retirement benefits, thereby promoting savings and financial security for employees without the significant administrative overhead associated with larger plans.